WoodWeek 12 August 2020
Meanwhile back on our wharves, community groups are outraged the Government has waived a deadline for log exporters to recapture emissions of the toxic fumigant methyl bromide. In July, an EPA decision-making committee agreed to waive the deadline for six months, until April 28, 2021, just as community groups feared would happen.
Moving to analysts’ views of log export markets where this week’s commentary from ANZ’s Susan Kilsby differs from the report from Westpac’s economists last week. Kilsby, an agriculture economist with ANZ, said that given the weak outlook for most economies, and physical distancing still in place in the major export market of India, she didn't expect a lift in log export prices "anytime soon".
Now to the real oil – we are pleased (and believe me, that’s an understatement) to announce registrations are well and truly open for our first two hybrid conferences of the year. Our WoodWorks mass timber conference runs on 20 & 21 October in Rotorua and then our ForestTECH conference runs less than a month later on 18-19 November.
WoodWorks Conference - With firm local market conditions for mass timber in New Zealand, our tall timber conference feature session is on the tallest timber building we have seen yet: the 9-storey all-timber Auckland City Mission Homeground high-rise building in downtown Auckland. This masterpiece of CLT and LVL is New Zealand’s version of the record setting ‘Brock Commons’ building in Vancouver, so we are pleased it is among our “All NZ” mass timber building presentations for this our 5th Annual WoodWorks Conference. Click here to see the program and register.
ForestTECH Conference - Despite uncertainties in Australia, our forest technology annual event is running as planned on 18-19 November in New Zealand and online. Some changes to the usual format to cope with Covid-19 conditions are in place for this year's event. Subject themes are split for the first time between remote sensing, data capture and forest inventory and forest establishment, mechanised planting and silviculture, two half-day workshops. In-field demonstrations are planned both before and after the planned conference and exhibition. Click here to register.
This week we have for you:
China wood imports and inventoriesChina Wood Imports Update - According to the China Bulletin, Softwood log stocks at China’s main ocean ports totalled 4.44 million m3 at the end of June 2020, a slight decline of 2.3 percent from the previous month. Radiata pine log inventories recorded an increase of 3.3 percent. European spruce log inventories totalled 653,000 m3, a significant decline of 33.7 percent.
Softwood lumber inventories in the Taicang port totalled 1.45 million m3 at the end of June 2020, about the same level as the previous month. SPF inventory amounted to 180,000 m3.
China’s softwood log imports from Canada in 2020 (YTD) was 315,000 m3, a significant drop of 65.1 percent compared to 2019 (YTD), 902,000 m3. New Zealand occupied the largest market share for softwood log imports in China. Comparing to last year, the volume of softwood log imports from New Zealand decreased 29 percent, dropping from 7,375,000 m3 to 5,234,000 m3. The softwood log imports from Russia and the USA were also down 37.1% and 60.5% respectively.
Don't for a minute think that log exports from BC to China are any significant competitive issue. The combined strategies and investment that both Government and industry leaders from Canada focus their energies on are lumber exports feeding the Chinese dream for Western-style housing.
The lumber volumes and value difference is massive. China softwood lumber imports from Canada in 2020 (YTD) was 1,212,000 m3, a sharp decline of 46.4 percent compared to 2019 (YTD), 2,260,000 m3. The softwood lumber imports from China’s largest importer Russia had a fall of 13.9% from 7,043,000 m3 to 6,063,000 m3. The softwood lumber imports from Finland and the USA decreased by 17.9% and 15.1% respectively.
Source: China Bulletin
Community anger as methyl bromide controls waivedCommunity groups are outraged that the Government has waived a deadline for log exporters to recapture emissions of the toxic fumigant methyl bromide – Two years ago, the Environmental Protection Authority advised that after October 28, 2020, anyone using the ozone-depleting gas methyl bromide for pest fumigations would have to recapture and destroy all emissions.
It was a “hard deadline” set in 2010, said Dr Fiona Thomson-Carter, the EPA’s then-general manager of hazardous substances. If industries such as forestry couldn’t show they were using recapture technology for all fumigations, “you’re not going to be able to use [methyl bromide] in New Zealand”. They were hollow words.
In July, an EPA decision-making committee agreed to waive the deadline for six months, until April 28, 2021, just as community groups feared would happen.
The EPA is currently considering an application by the forestry group Stakeholders in Methyl Bromide Reduction (STIMBR) to re-assess the recapture controls – it was against this background that the deadline waiver was granted. STIMBR had argued that it needed the extension because of the long lead-time for log exports to India, and how these might be affected by the decision-making process.
The EPA said the deadline extension was a “temporary measure to make sure the industry can continue to function while the main decision-making process is progressing”. The waiver would not influence or impact the ongoing process, it said.
Log export market viewsLog export prices down - Wharf gate returns for New Zealand logs are 12 percent below the five- year average on the back of overstocking, the summer slowdown in China and as spruce logs are being dumped into Asia from Europe. This has seen higher volumes of logs stocked on wharves in China with prices easing, particularly following a surge in exported NZ logs post lockdown.
It was better news for forestry companies, however, on the local front, on the back of demand for wooden posts and poles from export growth in the expanding kiwifruit sector, which uses Douglas fir battens to support its vines.
Scott Downs, director of sales and marketing at PF Olsen reports that log inventories had risen by 300,000- to-500,000 cubic metres over the past month, with at-wharf-gate prices for A-grade radiata logs dropping an average of $6 month-on-month to about US$110 per standard cubic metre. Downs said NZ log exporters were expecting small increases in the cost and freight price from this month, with supply likely to be restricted by reduced winter harvesting and smaller lot owners delaying their harvests until returns perk up.
But Susan Kilsby, agriculture economist with ANZ, said that given the weak outlook for most economies, and physical distancing still in place in the major export market of India, she didn't expect a lift in log export prices "anytime soon."
The bank's latest agrifocus report noted that falling demand for goods manufactured and shipped globally also meant impacted demand for pallets in China, reflecting reduced need for soft timbers like the pinus radiata sourced from NZ.
Kilsby said there were also question marks around longer term construction demand in China, where fast- growing radiata was also used to make boxing for concrete construction.
Local demand for logs - Downs however, said local timber mills were busy, on the strength of a rekindled DIY market and requests for structural timber in the North Island in particular.
ANZ suggested local demand could also extend over the next few years from the horticulture and agricultural industries in particular, on the back of kiwifruit orchard demand and for fencing of more waterways on beef, deer and dairy support properties.
Registrations OPEN for ForestTECH 2020ForestTECH 2020 is running on 18-19 November in Rotorua - For all of you, our loyal delegates keen to be networking again and meet face-to-face for once this calendar year ... the great news is our ForestTECH 2020 Conference program is complete and registrations are OPEN.
Despite uncertainties in Australia, ForestTECH is running as planned on 18-19 November. Some changes though to the usual format to cope with Covid-19 conditions are in place for this year's event.
Key features: Our main technical subject themes are split for the first time between remote sensing, data capture and forest inventory and forest establishment, mechanised planting and silviculture, two half-day workshops. Also in-field demonstrations are planned both before and after the planned conference and exhibition.
For the first time, ForestTECH 2020 will be both a live event and streamed on-line as a virtual event!
We're bringing you an array of extras that we think will really going to appeal to local, Australian and international delegates. Further details will to come each week. You can now check out the programme for both days on the event website: www.foresttech.events.
Automated log tagging: FGR updateAn exciting new log tracking project is getting underway within the Automation and Robotics programme, led by Dr Glen Murphy. The project, which is based on Swedish technology, aims to replace paper log tags with a unique punch code that will enable log identification and tracking from the time the log is made in the forest to the time it is delivered to the customer. The branding will eliminate the cost of branding logs with paint, and the cost of attaching log tags to export logs. It will also mean log measurement and other attribute data will be captured only once, eliminating the duplication that currently occurs in the forest-to-customer supply chain.
New Zealand technology companies are partnering with a Swedish company to further develop and commercialise the technology here in New Zealand. Glen Murphy is also putting together a project team which includes forestry companies, wood processors and port logistics companies, all of whom could adopt the new technology.
The plan is to have built an 'alpha' prototype log marker suitable for a NZ processor head and "alpha" prototype tag readers built by June 2021. This will be followed by testing of the alpha prototypes, and development of beta prototypes up to the end of 2022. Field demonstrations, commercialisation and deployment of the technology will then begin, with a project completion date before the end of 2025.
Photo: An example of the log marking (which is about the size of a credit card).
Analysts review Rayonier quarterly performanceQ2 was ahead of target. First quarter with POPE (acquired May 8). Harvest volume targets and EBITDA were increased across the board. Real Estate drove the upside, with NZ timberlands performing well despite a one-month COVID shutdown.
New Zealand (NZ). Nice quarter – despite COVID lockdown.Adj. EBITDA $9.9mm; BMO at $6.8mm, 1Q20 $10.2mm, 2Q19 $20mm. Q2 harvest volumes -23% y/y from nationwide COVID lockdown. Sawlog prices were weak: exports -12% y/y and domestic -19% y/y. Export price decline driven by lower demand and Chinese inventory build. China Inventories have now declined from 7mm cubic meters to 4.4mm – normal level.
Source: BMO Capital Markets, Canada
Eastland: Local land use implicationsCLAIMS that forestry destroys local communities and jobs are refuted in a PricewaterhouseCooper (PwC) report - The report also indicates forestry has on average a larger economic value per hectare than pastoral farming.
The report, titled The Economic Impact of Forestry in New Zealand, was produced for the Ministry of Primary Industries and data in it is based on 2018 figures. Business analysts PwC compared the economic and employment output of forestry with sheep and beef farming, and also looked at carbon forestry and a mix of land use.
NZ Forest Owners Association (NZFOA) said the report was a clear and objective refutation of widespread statements in the media recently claiming forestry destroys local communities and jobs.
“PwC has found forestry makes more than double a value chain impact than sheep and beef farming in both value-add by land use and also in providing employment,” the forest owners said.
Farmers have argued for some time that their industry employs more people and is more valuable to the economy than forestry, and that increased forestry would reduce employment in rural communities.
Concern has also been voiced around the sale of farmland to forestry interests. The PwC report states: “From the modelling we have done as part of this report, we conclude that on average the forestry value chain has a larger economic impact per hectare than the sheep and beef value chain.”
The key challenge in the comparison between forestry and farming was the “dramatic” difference in production cycles of each type of land — annual for sheep and beef; multi-decade for forestry,” the report says.
Eastland Wood Council chief executive Kim Holland (pictured) said the council looked forward to Gisborne District Council tabling and considering the PwC report in its next Long Term Plan.
Source: Gisborne Herald
Waikato: $14 million trades training centre - WOWNew $14m Integrated Trades Training Centre For South Waikato - South Waikato’s main town Tokoroa will have a brand new $14 million trades training centre by 2022 catering for up to 500 students a year thanks to a Government grant of $10.84 million announced last Friday.
The new trades training centre is being co-funded with $1 million grants from each of Toi Ohomai Institute of Technology, Trust Waikato and the South Waikato Investment Fund Trust (SWIFT).
SWIFT has facilitated and driven the project including buying the one- hectare site for the centre on Chambers St near the northern entrance to Tokoroa, doing the preliminary design, engineering and costings for the project and applying for the Government funding.
The new trades training centre will bring together three separate existing Toi Ohomai training sites in Tokoroa into one purpose-built campus catering for the key local sectors including farming, engineering, construction, manufacturing and logistics.
SWIFT Economic Development Manager Francis Pauwels said a survey of South Waikato companies operating in five major industry sectors found they were planning to require about 850 new staff over the next five years.
“These companies – in construction, engineering, transport, manufacturing, forestry and hospitality – say their number one preference is to employ locals because they stay local and contribute to the community.
“About 60 per cent of the people who could be employed in these jobs will be new trainees and especially young people. About a fifth of people aged 18-25 years in South Waikato are not in employment, education or training (NEETS) – and we are confident this initiative will be the catalyst to get these young people into training and employment. We also expect to have a lot of second chance learners coming through the centre.”
Toi Ohomai Chief Executive Dr Leon Fourie said SWIFT and Toi Ohomai had worked closely together since the initiative began in early 2018 to decide what a purpose-built facility would look like.
“This Government funding will enable us to realise a vision we have been working towards for the last two and a half years. Toi Ohomai currently has three training sites in Tokoroa, all of which are older facilities and are no longer fit for purpose. This new facility will enable Toi Ohomai to support learners in Tokoroa rather than having to transport students to bigger hubs such as Rotorua, Hamilton or Taupo.
“Toi Ohomai will run the training centre but we see this operating as a partnership with SWIFT, South Waikato District Council, Raukawa, the Pacific Island community and strong alignment with the business community. Partnership with local iwi and Pasifika is critical given the Maori population of the South Waikato is 25% - 35% in Tokoroa - and 12% Pasifika.”
Dr Fourie said concept plans developed for the centre will include a digital entrepreneurial hub and a café and childcare facilities to enable parents to train at the centre and reduce the digital divide in the Waikato Region. “As well as creating excellent learning experiences for our tauira we expect the facility to provide more jobs for local residents.”
South Waikato District Mayor Jenny Shattock said the Government investment in the new training centre is the result of patient collaboration and engagement between Toi Ohomai, SWIFT, Council and Government.
“This is an excellent example of the South Waikato education, business and local government sectors working together to help the district thrive and grow economically and socially.”
She said the Toi Ohomai Institute’s new location near State Highway 1 would provide a fabulous new gateway to the northern entrance to Tokoroa that would complement the town centre redevelopment that is close to completion.
SWIFT Chairman Bruce Sherman said South Waikato is in a prime geographic position and is now in growth mode. “This new training centre will provide a much needed path to skilled employment not just for Tokoroa, but Putāruru, Tirau, and Arapuni.
“Our youth deserve facilities that inspire them to learn and contribute and we are very grateful the Government agrees.” Mr Sherman said the development of the site itself will potentially involve over 200 people for the design and build process, and local firms will be used as much as possible.
“Toi Ohomai currently has about 350 enrolments per year including part time courses. We expect that will grow to around 500 per year as successful graduates show a clear pathway to meaningful jobs. The SWIF Trust’s main objective is better economic and social outcomes for the South Waikato and work ready, well trained, skilled employees is a major attraction for start-ups and companies looking to relocate from inefficient city locations.
“SWIFT is proud to work with Toi Ohomai, Trust Waikato and South Waikato District Council in delivering this outcome for the South Waikato. We have more exciting projects in the pipeline so this is the first step in many to achieving lasting and positive change for our communities.”
Source: Scoop News
BC log exports to China volatileBC log exports saw a very strong rebound in May - Year-to-date log exports were down 54.5%; however, May's volume jumped from a dismal sub-150,000 m3 per month range for the prior five months, to a more normal level of 430,000 m3. May's exports to China and Korea jumped, 21.3% y/y and 13.1% y/y, respectively. Exports to Japan and the U.S. were down 82.9% y/y and 86.2% y/y.
Source: David Elstone, Spartree Group
Finally, Fonterra favours woodFonterra now favours wood over electricity for reducing emissions from its South Island plants. The country’s biggest dairy processor said using electricity to convert its South Island plants from coal is technically challenging and would cost “well over $200” for every tonne of carbon saved.
Fuel switching is the single most effective thing the company can do to reduce its emissions, said Linda Thompson, the firm’s sustainable energy and utility manager.
While there has been much discussion by the government about the potential for firms to use surplus power when the Tiwai Point aluminium smelter closes, Thompson said its focus is more on wood, which it has used at its Brightwater plant near Nelson and is installing at Te Awamutu.
Even without the cost of getting increased power supplies to a site, Thompson said converting an existing plant to incorporate new technology is not easy and can be costly. Electricity is not a “silver bullet” and comes with “significant engineering challenges." Wood biomass is less complex.
Fonterra accounts for about 20 percent of the country’s carbon emissions. About 89 percent of those are generated on-farm, with about 10 percent from the company’s manufacturing plants.
China GDP drops and recoversIn China, the State Council Information Office has reported that GDP in the first half of 2020 declined 1.6% year on year. GDP fell 6.8% in the first quarter and expanded 3.2% in the second quarter.
In the first half of 2020 investment in fixed assets (excluding that by farmers) fell 3.1% to RMB28.1603 trillion, down 3.2% between January and May and down 13% compared to the first half of 2019.
In the first 5 months investment in infrastructure fell 2.7%, investment in manufacturing fell 11.7% which on a year on year basis translates to a 17% and 13.5% decline respectively. In contrast, investment in real estate development grew almost 2% but was still down around 8% year on year.
Buy and Sell
... and finally ... your Wednesday funny
A young boy enters a barber shop and the barber whispers to his customer: “This is the dumbest kid in the
world. Watch while I prove it to you.”
RULES FOR SUCCESS
There are two rules for success in life:
Rule 1: Don't tell people everything you know.
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